Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer the following: Agro International has a foreign subsidiary, which requires $200K cash every month. It uses a wire service for the cash transfer.

Please answer the following:

image text in transcribed

Agro International has a foreign subsidiary, which requires $200K cash every month. It uses a wire service for the cash transfer. The cost of wire transfer is $110. In order to send cash to its subsidiary, the Agro has to liquidate part of its securities portfolio which generates 12% annual return. How many wire transfers PER YEAR should Agro make? (Hint: Use the Baumol Model. The annual rate of return in this question is given as 12 actual monthly rate of return. You can round off to the nearest whole number, for example if your answer is 17.62, you can answer 18.) Your

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions